Last week’s post on employer-sponsored retirement plans, A retirement savings plan primer, generated a great question from BindingLogic, a small business owner. “It has been suggested to me that I should see if I could pay a fee to the Canadian Pension Plan so that I would have a small pension one day. Is there such a thing, how would one go about it (or increasing it)? I have some, a small amount of investments, but unfortunately with the recession they have taken a severe hit.”

The short answer to the question is no. I spoke with two representatives of the Canada Pension Plan (CPP), and both told me that there is no provision for additional contributions like BindingLogic has described.

But the idea has been floated. The Canadian Federation of Independent Business (CFIB) wants entrepreneurs to have access to less expensive money management fees via a large pooled fund manager like the CPP Investment Board. “The wonderful thing about these huge funds is that they get the cost of management down,” said Catherine Swift, president and chief executive officer of CFIB. “So you get more ultimately ending up in the retiree’s pocket, not the financial manager’s pocket.”

The idea could work with or without CPP participation. What Swift is describing is a multi-employer-style plan, which could be made available to small businesses across the country. Each participant would have his or her own account, within which money could be saved in a tax-efficient manner. Plan services could be provided by the private or public sector, and priced to reflect the efficiencies that funds of this size enjoy.

Entrepreneurs like BindingLogic need the help. A 2006 study, conducted by CFIB, found that while a third of independent business owners planned to close their doors within five years, only 10% of small- and medium-sized enterprise (SME) owners had a formal succession plan in place. Thirty-eight per cent had an informal, unwritten succession plan. More than half had no plan of any kind.

Swift’s idea has yet to gain political traction, but she’s “somewhat optimistic about it.”

“We’re going to keep pushing,” she told me. “We know there’s a crisis coming. By and large, the average person has not adequately provided for their own retirement.”

In the meantime, there are options for small business owners. Talk to a financial advisor about retirement and insurance options for you and your business.

(In the interest of disclosure, Sun Life Financial markets group insurance coverage to CFIB members.)